The Internship Economy

The internship economy — who it helps, who it hurts, where it takes us.

Bad joke of the day: How many interns does it take to change a light bulb? Answer: Who cares? They’re free.

Well, not at Google. Software interns there make $6,000 a month.  But how many of us are going to work at Google?  Not many.

For the rest, the way of the intern — often unpaid — is becoming very familiar.  Get an internship — or two or three or four — young people are told, to build experience and a resume.

In the new movie "The Internship," Owen Wilson and Vince Vaughn are in their forties and interning.

This hour On Point: The internship economy — who it helps, who it hurts and where it takes us.
-- Tom Ashbrook

Ross Eisenbrey, vice president at the Economic Policy Institute, and lawyer and former commissioner of the U.S. Occupational Safety and Health Review Commission. (@RossEisenbrey)

Mary Schilling, executive director of Career Development at The College of William and Mary.

Eisenbrey on how internships have evolved:

It used to be that entry-level work was minimum wage work. You got paid for it; you got paid a very low wage, and then eventually you worked your way up. And employers didn't pretend that you were supposed to come with skills and experience to your entry-level job.

Something happened over the last 20 or 30 years. Part of it is that the government shrank in the Reagan administration, and law enforcement in the labor area shrank dramatically — it was cut in half. And so employers found that they could get away with calling somebody an intern even though it was just a typical entry-level job.

So now we've gotten to the point where there are probably, in any given year, half a million young people — mostly young people, but not entirely — working unpaid in jobs that should be paid under the Fair Labor Standards Act, should be paid at least the minimum wage. I see advertisements in Craig's List and other places for unpaid internships that require people to have had prior experience, to come with skills in computers, in database management — it's pretty shocking.

Schilling on the difference between internships and entry-level jobs:

I guess I'm not clear that our students who go on and graduate and get jobs, that they are competing with the interns who we also send out. Typically the internship level is at one level, and the entry-level job is a notch up, at a level of more responsibility, higher level functioning expected, more opportunity to grow in the position than in a three-month internship or a six-week internship or whatever.

Schilling on the benefits of internships:

Originally I would say that internships are the best kept secret for getting started in your career path. Then I started saying it's not even a secret — you got to do it. So we really try to encourage students to do at least one, if not a couple, internships, whether in the local community during the academic year, during the summer in their home community or in other communities. It really does make a difference not just in their employability, but in their level of confidence, their ability to make a connection between what they're learning in the classroom and the academic experience and the real world, the application of theory to practice becomes really important. Learning about the corporate culture, the non-profit culture, the government sector, communication — all of these experiences really do make for a more employable, more confident, more job ready individual.

Eisenbrey on working-class and middle-class kids losing out:

It's a particular problem with government because there it's not illegal. And we should talk about that — that a lot of these are illegal employment relationships that are masquerading as internships. But in the government, they actually have the right to hire somebody and not pay them, to take volunteer service. And when that is your only foot in the door to get a job, let's say as a legislative aid in Congress, that you have to go through this path that starts with unpaid internships — and sometimes serial unpaid internships, two or three of them — who can afford to do that? It's upper-middle-class kids, and working-class and middle-class families can't afford to send their children to Washington and pay the rents here and have their child work for nothing.

Schilling on providing stipends for disadvantaged students:

Well, if we say that certain students are disadvantaged, let's say if we feel as though a lot of the unpaid internships may be taken by students who are middle class, upper-middle class because they can afford to take an unpaid internship — one of the things that colleges and universities across the country are doing is to try to recognize the fact that first generation students or students from certain socioeconomic levels may be truly disadvantaged because they feel like they have to make money and bring in some money for college or for spending money or whatever it is. So what a number of colleges have done is put together funding programs to which a student can apply. So a student would secure an internship — let's say it's in a non-profit or a government or an environmental [organization] — put in a kind of proposal for $2,000 to $3,000 for the summer so they could afford to not work at flipping burgers or mowing lawns or painting houses but could instead do a significant pre-professional, educational, and a real significant kind of an internships and could be at least stipended for the summer. And that would be usually out of alumni monies, parent monies, some other kinds of sort of philanthropic, charitable kinds of contributions that would say, "OK, look, we want students to not be disadvantaged by their background and to have the same opportunities that students of the upper-middle class and upper class would be having."

Eisenbrey on how internships can harm young workers and make them "vulnerable":

We're to the point where there are employers who say they want to see experience on a resume before they'll hire somebody for what is an entry-level job. So, for that employer, maybe the only way in is through an internship. And, presumably, most of those internships now are going to be unpaid. But there's also evidence that this is a way to hurt yourself, for a young person to hurt him or herself. The National Association of Colleges and Employers surveyed young people who had had internships and found if you had a paid internship, you were more likely to get hired and more likely to find a job that paid a good wage. If you were in an unpaid internship, you did worse in some instances than people who had no internship at all. [TOM ASHBROOK: Now why would that be? Because a prospective employer says, "Ah, this person is willing and prepared and able to work for free so let's do that again?"] Yeah, you've shown that you are a vulnerable person in the workforce, willing to work for nothing. And so an employer — let's say they offer you a job. Instead of offering you $35,000, they know they can get you for $25,000. This is real evidence that you can hurt yourself by taking these unpaid internships.

Schilling on internships varying by sector:

I think the issue is sectors. If you're talking about the corporate sector, finance, accounting, consulting, technology, engineering — those kinds of firms usually pay because they have that ability to pay and they can be competitive with the paid internship. But then you have communication, like PR, advertising, publishing — those kids of groups who do not pay. But what they often do is say, "Since we're not going to pay you, we are willing to have you do this internship only if you take academic credit." So that's sort of relieves them of the pressure or the expectation to pay. And many students want these experiences in the communication industry enough that they will do them for academic credit, and they get that support from the college. And then there are those in the non-profit sector — environmental, the arts, et cetera — who really don't usually have the kind of staffing budget to be able to pay an intern, but the students again need that experience to break into the field.

Eisenbrey on the federal criteria for a legitimate unpaid internship:

It's very unlikely that you can have a legal internship in PR, in advertising, in publishing — these are all for-profit businesses that are covered by the Fair Labor Standards Act, which says you cannot suffer or permit an employee to work for you and not pay them the minimum wage. So when these are unpaid internships, the chances are close to 100% that it's an illegal relationship.

There's a six-part test that the Department of Labor has online...it says that the internship has to be structured, closely supervised like vocational education, it has to be for the benefit of the student, not the benefit of the PR company or advertising company that's getting this work. There can't be an immediate benefit to them, the idea being they ought to be putting more into educating the student than they're getting out in work product. It can't displace another employee. Every company has somebody who answers the phones; if the internship is answering the phones, you're replacing somebody. That's a job that should be paid. Those are four of the six. You can't be promised that at the end of this unpaid experience you'll be given a job. [TOM ASHBROOK: Why not? People would probably be love that promise.] Well, then it's just like try-out employment; the employer is just getting a period of free service and is planning to hire you anyway.

The New York Times: Do Unpaid Internships Exploit College Students? -- "The labor of unpaid interns has quietly replaced or displaced untold thousands of workers. Lucrative and influential professions — politics, media and entertainment, to name a few — now virtually require a period of unpaid work, effectively barring young people from less privileged backgrounds."

The Guardian: Unpaid Internships And A culture Of Privilege Are Ruining Journalism -- "The practice of asking recent graduates to spend their days working for free while paying rent and living in a city like New York is a barrier for entry to students from mid- to lower-class backgrounds."

USA Today: Students Fight Back Against Illegal Unpaid Internships -- "I took two unpaid internships advertised by the school, and both were exploitative on two different extremes. For one of these internships, I was literally performing my boss' job for him and I was denied pay. For another internship, I found myself only performing menial tasks, such as pressing elevator buttons and going on coffee runs. For both internships, I was treated like an employee and did not receive compensation for my work."

Ed Helms gave the commencement address at Knox College on June 8, 2013. We featured an excerpt from his remarks at the end of this hour.

Read the full transcript or watch his speech here: